Mode V failures tend to be as much a deformation limit as the wood fibers in the dowel are deforming - so the capacity limit is set at the load after deformation equal to 5% of the dowel diameter. In a braced frame situation with tension joinery, this deformation can end up causing larger deformations within the structure than calculated. As such, it is most common for timber frames, if they are being enclosed by some building envelope (stick framed walls, SIPs, board and batten siding, etc), that we rely on the building envelope to take all of the lateral load via shear walls. The adage "load goes to stiffness" holds true, and, while the braced frame may be able to resist quite a bit of lateral load at an ultimate level, it tends to only engage that capacity after quite a bit of deformation, and, the exterior walls are a stiffer, and therefore the preferred, load path. In seismic areas, this is also quite a bit more favorable, as the ductility of nailed shear walls is substantially more defined than that of a braced frame, and thus we have much better response coefficients.

If you are designing mortise and tenon joinery using steel dowels, then utilizing the the design parameters of pertinent design code (NDS, CSAO86, etc) for a bolted connection would be the appropriate methodology. The edge/spacing/relish detailing requirements within TFEC 1 are based on a wood peg, and, would be quite unconservative for a steel dowel.